Tony Giacalone has been a real estate broker in East Boston for over 20 years, and he's had a front-row seat when it comes to watching this traditionally ethnic, working-class neighborhood rise and fall in lockstep with the Bay State's housing market. It's a viewpoint that's given him some perspective relative to Eastie's smoldering home market.

To be sure, business is good for Giacalone and his peers who make a living brokering home sales in East Boston. Home prices are up roughly 25 percent year-over-year, while the median home value as of Sept. 30 was $276,000 — roughly 4 percent above where it was five years ago at the depths of the recession and recent housing downturn.

The community of around 40,000 residents ranked No. 1 in the latest edition of the Boston Business Journal’s quarterly Hottest Housing Markets report. The analysis tracks 361 communities in the commonwealth featuring data that is provided by Zillow.com and then used to create a basket of sales and pricing metrics that identify the local home markets that are most — and least — in demand. The research is conducted on a quarterly basis, in this case the three months that ended Sept. 30.

Giacalone, owner of Tony's Realty, said prices and demand are certainly on the rise in East Boston, but he cautioned that the numbers tell only half the story. While East Boston is certainly seeing some of the same gentrification that has affected other hot neighborhoods in the city such as the South End, South Boston and Jamaica Plain, he said much of the area's buy-side demand is being fueled by a handful of investor groups drawn to the market's rising rents and healthy stock of multifamily housing. CLICK HERE TO READ MORE.

Giacalone also attributed the neighborhood's hefty spike in pricing to the fact that East Boston was "artificially deflated" by a spate of short sales and property foreclosures after the downturn. He said many properties were simply abandoned by homeowners who put little down and often collected rental income while failing to stay current with their mortgages. "It wasn't really the sob story that people heard about on the news."

Phil Gutowski, a rental broker and the owner of East Boston Real Estate Co., estimates that the average East Boston apartment rents for 10-to-20 percent less than units in other competing areas such as Allston-Brighton, the Fenway and parts of Dorchester. He said the neighborhood has seen a particular influx of working singles and young couples lured by Eastie's relative value. He said long-held perceptions relative to crime and convenience to the Downtown are also fading.